Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Reform Act”) was enacted into law.  The Tax Reform Act includes a reduction in the federal tax rate for corporations from 35% to 21% as of January 1, 2018, a one-time transition tax on the cumulative undistributed earnings of foreign subsidiaries as of December 31, 2017, a repeal of the corporate alternative minimum tax, and more extensive limitations on deductibility of performance-based compensation for named executive officers.  Other provisions effective as of January 1, 2018, which could materially impact the Company in the near-term, include the creation of a new U.S. minimum tax on foreign earnings called the Global Intangible Low-Taxed Income (“GILTI”) and limitations on the deductibility of interest expense. 

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Reform Act, the Company recorded provisional amounts as of December 31, 2017, in accordance with Staff Accounting Bulletin No. 118 ("SAB 118").  We recorded a provisional one-time non-cash charge of $92 million in the fourth quarter of 2017 to remeasure the deferred tax assets for the new rate and for other legislative changes.  In the fourth quarter of 2018, we recorded a benefit of $2.3 million to reverse a component of the provisional one-time non-cash charge as a result of guidance issued by the U.S. authorities.

We filed our 2017 U.S. federal income tax return in October 2018, which did not reflect a U.S. federal current tax liability for the transition tax due to our high-tax foreign income, but we recorded an incremental $1.3 million of foreign tax credits, offset with a full valuation allowance in the fourth quarter of 2018 which was in addition to the provisional $31.1 million foreign tax credit offset with a full valuation allowance related to the transition tax recorded in the fourth quarter of 2017. We did not record a current state tax liability related to the transition tax in accordance with the interpretation of existing state laws and the provisional estimates in the fourth quarter of 2017, but we recorded the state impact of the transition tax of $0.2 million when we filed our tax returns in the fourth quarter of 2018.

We adopted an accounting policy related to the provision of deferred taxes related to GILTI and determined that we would not record deferred taxes with respect to GILTI, but would instead treat GILTI as a current period cost.  We did not change our assertion on the determination of which subsidiaries that we consider to be permanently invested and for which we do not expect to repatriate to the U.S. as a result of the Tax Reform Act.  The accounting for the Tax Reform Act was completed in the fourth quarter of 2018 in accordance with SAB 118.

	Years Ended December 31,
(In millions)	2019			2018		2017
Income (loss) from continuing operations before income taxes
U.S.	$	(90.2	)	(32.9	)	(41.6	)
Foreign	183.7			75.4		223.1
Income from continuing operations before income taxes	$	93.5		42.5		181.5

Provision (benefit) for income taxes from continuing operations
Current tax expense (benefit)
U.S. federal	$	(0.8	)	(2.3	)	(33.7	)
State	4.3			0.7		0.4
Foreign	90.8			92.1		96.8
Current tax expense	94.3			90.5		63.5
Deferred tax expense (benefit)
U.S. federal	(30.4		)	(7.5	)	106.2
State	(4.8		)	(2.9	)	(4.9	)
Foreign	1.9			(10.1	)	(7.1	)
Deferred tax expense (benefit)	(33.3		)	(20.5	)	94.2
Provision for income taxes of continuing operations	$	61.0		70.0		157.7

	Years Ended December 31,
(In millions)	2019		2018	2017
Comprehensive provision (benefit) for income taxes allocable to
Continuing operations	$	61.0	70.0	157.7
Discontinued operations	0.2		—	(0.1	)
Other comprehensive income (loss)	0.4		5.0	(1.8	)
Comprehensive provision for income taxes	$	61.6	75.0	155.8

Rate Reconciliation

The following table reconciles the difference between the actual tax rate on continuing operations and the statutory U.S. federal income tax rate of 21% for 2019 and 2018 and 35% for 2017.

	Years Ended December 31,
(In percentages)	2019		2018		2017
U.S. federal tax rate	21.0	%	21.0	%	35.0	%
Increases (reductions) in taxes due to:
Venezuela deconsolidation and devaluations	—		62.4		—
Foreign rate differential	17.3		39.3		(3.7	)
Taxes on cross border income, net of credits	9.3		22.6		2.6
Tax on accelerated U.S. income(a)	(7.9	)	—		(0.2	)
Adjustments to valuation allowances	16.0		13.1		3.4
Foreign income taxes	13.7		18.9		5.1
Tax reform	—		(4.9	)	47.4
French business tax	3.0		8.0		2.0
State income taxes, net	(2.2	)	(1.3	)	(1.3	)
Share-based compensation	(4.8	)	(14.4	)	(3.5	)
Other	(0.2	)	—		0.1
Actual income tax rate on continuing operations	65.2	%	164.7	%	86.9	%

(a) In 2019, we recognized a benefit of $7.3 million ($0.4 million benefit in 2017) related to a previously recognized $23.5 million current tax expense that accelerated U.S. taxable income in 2015.

Components of Deferred Tax Assets and Liabilities

	December 31,
(In millions)	2019			2018
Deferred tax assets
Pension liabilities	$	62.1		55.4
Retirement benefits other than pensions	61.2			73.8
Lease liabilities	62.8			—
Workers’ compensation and other claims	37.0			30.6
Property and equipment, net	31.0			7.1
Other assets and liabilities	93.6			88.5
Net operating loss carryforwards	51.7			42.0
Alternative minimum and other tax credits(a)	76.8			73.4
Subtotal	476.2			370.8
Valuation allowances	(118.3		)	(100.7	)
Total deferred tax assets	357.9			270.1
Deferred tax liabilities
Right-of-use assets, net	59.3			—
Goodwill and other intangibles	17.4			22.0
Other assets and miscellaneous	28.9			28.3
Deferred tax liabilities	105.6			50.3
Net deferred tax asset	$	252.3		219.8
Included in:
Noncurrent assets	273.5			236.5
Noncurrent liabilities	(21.2		)	(16.7	)
Net deferred tax asset	$	252.3		219.8

(a) U.S. foreign tax credits of $72.6 million have a 10 year carryforward period and the remaining credits of $4.2 million have various carryforward periods. The U.S. foreign tax credits and other U.S. tax credits have a valuation allowance.

Valuation Allowances

Valuation allowances relate to deferred tax assets for certain federal credit carryforwards, certain state and non-U.S. jurisdictions.  Based on our analysis of positive and negative evidence including historical and expected future taxable earnings, and a consideration of available tax-planning strategies, we believe it is more-likely-than-not that we will realize the benefit of the existing deferred tax assets, net of valuation allowances, at December 31, 2019.

	Years Ended December 31,
(In millions)	2019			2018		2017
Valuation allowances:
Beginning of year	$	100.7		98.9		62.8
Expiring tax credits	(0.3		)	(0.6	)	(0.4	)
Acquisitions and dispositions	3.1			(0.7	)	(3.4	)
Changes in judgment about deferred tax assets(a)	5.3			—		(1.8	)
Other changes in deferred tax assets, charged to:
Income from continuing operations	10.0			6.1		43.9
Other comprehensive income (loss)	—			(0.3	)	0.2
Foreign currency exchange effects	(0.5		)	(2.7	)	(2.4	)
End of year	$	118.3		100.7		98.9

(a) Changes in judgment about valuation allowances are based on a recognition threshold of “more-likely-than-not” of realizing beginning-of-year balances of deferred tax assets. Amounts are recognized in income from continuing operations.

Net Operating Losses

The gross amount of the net operating loss carryforwards as of December 31, 2019, was $414.2 million.  The tax benefit of net operating loss carryforwards, before valuation allowances, as of December 31, 2019, was $51.7 million, and expires as follows:

(In millions)	Federal		State	Foreign	Total
Years of expiration
2020-2024	$	—	0.1	7.6	7.7
2025-2029	—		0.7	3.7	4.4
2030 and thereafter	—		15.6	0.6	16.2
Unlimited	—		—	23.4	23.4
	$	—	16.4	35.3	51.7

Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Years Ended December 31,
(In millions)	2019			2018		2017
Uncertain tax positions:
Beginning of year	$	9.5		10.4		6.4
Increases related to prior-year tax positions	0.2			0.3		0.1
Decreases related to prior-year tax positions	(0.8		)	—		(0.5	)
Increases related to current-year tax positions	1.4			1.3		1.4
Increases related to acquisitions	3.1			—		4.2
Decreases related to acquisitions	—			(0.2	)	—
Settlements	(0.1		)	(0.4	)	(0.1	)
Effect of the expiration of statutes of limitation	(1.3		)	(1.1	)	(0.8	)
Foreign currency exchange effects	—			(0.8	)	(0.3	)
End of year	$	12.0		9.5		10.4

Included in the balance of unrecognized tax benefits at December 31, 2019, are potential benefits of approximately $11.5 million that, if recognized, will reduce the effective tax rate on income from continuing operations.

We recognize accrued interest and penalties related to unrecognized tax benefits in provision (benefit) for income taxes. We reverse interest and penalty accruals when a statute of limitation lapses or when we otherwise conclude the amounts should not be accrued.  The impact of interest and penalties on the 2019 and 2018 tax provisions was not significant. The net increase (reversal) included in provision (benefit) for income taxes was ($0.3) million in 2017. We had accrued interest and penalties of $5.4 million at December 31, 2019, and $1.8 million at December 31, 2018.

We file income tax returns in the U.S. federal and various state and foreign jurisdictions. With a few exceptions, as of December 31, 2019, we were no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016.

Additionally, due to statute of limitations expirations and audit settlements, it is reasonably possible that approximately $1.6 million of currently remaining unrecognized tax positions may be recognized by the end of 2020.